Comments on: Discussion about applicability of prediction markets for long-term prediction! http://www.midasoracle.org/2007/01/18/discussion-about-applicability-of-prediction-markets-for-long-term-prediction/ Prediction Markets For All Tue, 06 Jan 2009 09:52:43 +0000 http://wordpress.org/?v=2.7 hourly 1 By: Chris. F. Masse http://www.midasoracle.org/2007/01/18/discussion-about-applicability-of-prediction-markets-for-long-term-prediction/#comment-15749 Chris. F. Masse Mon, 11 Jun 2007 09:53:15 +0000 http://www.midasoracle.org/2007/01/18/discussion-about-applicability-of-prediction-markets-for-long-term-prediction/#comment-15749 European Foresight Project Launches Prediction Market. http://www.midasoracle.org/2007/06/10/european-foresight-project-launches-prediction-market/ European Foresight Project Launches Prediction Market.
http://www.midasoracle.org/200.....on-market/

]]> By: James Annan http://www.midasoracle.org/2007/01/18/discussion-about-applicability-of-prediction-markets-for-long-term-prediction/#comment-959 James Annan Fri, 09 Feb 2007 10:00:42 +0000 http://www.midasoracle.org/2007/01/18/discussion-about-applicability-of-prediction-markets-for-long-term-prediction/#comment-959 Um...sorry for the lengthy delay. IMO slv1 shouldn't be more than about $0.05, and even that depends on believing some rather speculative ideas about ice sheets for which there is precious little evidence. Um…sorry for the lengthy delay.

IMO slv1 shouldn’t be more than about $0.05, and even that depends on believing some rather speculative ideas about ice sheets for which there is precious little evidence.

]]> By: Christian Wiehe http://www.midasoracle.org/2007/01/18/discussion-about-applicability-of-prediction-markets-for-long-term-prediction/#comment-899 Christian Wiehe Mon, 05 Feb 2007 14:48:58 +0000 http://www.midasoracle.org/2007/01/18/discussion-about-applicability-of-prediction-markets-for-long-term-prediction/#comment-899 I agree with James and Jason: How can I solve the problem of getting NOW a prediction for e.g. the unemployment rate of the US in 2015 besides running a market till this point in time? I think the challenge is to find a solution, how to pay-off traders (in a satisfactory way) joining e.g. a market for 2 months from now to 4/5/2007 to predict an event in 10 years. What do you think about 2 parallel markets and using the outcome of the other one as the pay-off function? I believe that rational traders would try assess just what traders of the other market believe and don't really integrate their own information! On the other hand, assuming that there is no information available about the estimation of traders from the other group, the best possible assessment of the success of the traded concepts seems to be the optimal strategy! I agree with James and Jason:

How can I solve the problem of getting NOW a prediction for e.g. the unemployment rate of the US in 2015 besides running a market till this point in time?

I think the challenge is to find a solution, how to pay-off traders (in a satisfactory way) joining e.g. a market for 2 months from now to 4/5/2007 to predict an event in 10 years.

What do you think about 2 parallel markets and using the outcome of the other one as the pay-off function?

I believe that rational traders would try assess just what traders of the other market believe and don’t really integrate their own information!
On the other hand, assuming that there is no information available about the estimation of traders from the other group, the best possible assessment of the success of the traded concepts seems to be the optimal strategy!

]]> By: Daniel Horowitz http://www.midasoracle.org/2007/01/18/discussion-about-applicability-of-prediction-markets-for-long-term-prediction/#comment-743 Daniel Horowitz Mon, 22 Jan 2007 21:47:20 +0000 http://www.midasoracle.org/2007/01/18/discussion-about-applicability-of-prediction-markets-for-long-term-prediction/#comment-743 Future truth claims can be balanced with *current* truth claims. e.g. "The sea level is rising" Future truth claims can be balanced with *current* truth claims.

e.g. “The sea level is rising”

]]> By: Chris Masse http://www.midasoracle.org/2007/01/18/discussion-about-applicability-of-prediction-markets-for-long-term-prediction/#comment-741 Chris Masse Mon, 22 Jan 2007 16:13:27 +0000 http://www.midasoracle.org/2007/01/18/discussion-about-applicability-of-prediction-markets-for-long-term-prediction/#comment-741 To James Annan: For clarity, what is the right price of the FX Claim SLvl, for you? "By 2030, the greenhouse effect and other causes will have raised the average world sea level by 1 meter from its 1994 level." http://www.ideosphere.com/fx-bin/Claim?claim=SLvl (((I dislike sentences with three negations in them. It gives you dizziness.))) To James Annan:

For clarity, what is the right price of the FX Claim SLvl, for you?

“By 2030, the greenhouse effect and other causes will have raised the average world sea level by 1 meter from its 1994 level.”

http://www.ideosphere.com/fx-bin/Claim?claim=SLvl

(((I dislike sentences with three negations in them. It gives you dizziness.)))

]]> By: Robin Hanson http://www.midasoracle.org/2007/01/18/discussion-about-applicability-of-prediction-markets-for-long-term-prediction/#comment-740 Robin Hanson Mon, 22 Jan 2007 15:43:59 +0000 http://www.midasoracle.org/2007/01/18/discussion-about-applicability-of-prediction-markets-for-long-term-prediction/#comment-740 James, I think we can agree that T2015 would not be a problem in a well functioning real money market. James, I think we can agree that T2015 would not be a problem in a well functioning real money market.

]]> By: Jason Ruspini http://www.midasoracle.org/2007/01/18/discussion-about-applicability-of-prediction-markets-for-long-term-prediction/#comment-739 Jason Ruspini Mon, 22 Jan 2007 15:09:10 +0000 http://www.midasoracle.org/2007/01/18/discussion-about-applicability-of-prediction-markets-for-long-term-prediction/#comment-739 I don't know what the "right" price of T2015 should be and the contract doesn't quite reveal time preference in the first place since buyers aren't lending funds to sellers. Insofar as the contract can be interpreted as an interest rate, it's pretty low at ~0.50%, though positive. I don’t know what the “right” price of T2015 should be and the contract doesn’t quite reveal time preference in the first place since buyers aren’t lending funds to sellers. Insofar as the contract can be interpreted as an interest rate, it’s pretty low at ~0.50%, though positive.

]]> By: James Annan http://www.midasoracle.org/2007/01/18/discussion-about-applicability-of-prediction-markets-for-long-term-prediction/#comment-729 James Annan Mon, 22 Jan 2007 07:06:27 +0000 http://www.midasoracle.org/2007/01/18/discussion-about-applicability-of-prediction-markets-for-long-term-prediction/#comment-729 It doesn't take any resources to get T2015 right, beyond those required to read the claim! What sort of extra resources do you think would solve this apparent problem with the market-based approach? It doesn’t take any resources to get T2015 right, beyond those required to read the claim! What sort of extra resources do you think would solve this apparent problem with the market-based approach?

]]> By: Robin Hanson http://www.midasoracle.org/2007/01/18/discussion-about-applicability-of-prediction-markets-for-long-term-prediction/#comment-706 Robin Hanson Sun, 21 Jan 2007 09:58:24 +0000 http://www.midasoracle.org/2007/01/18/discussion-about-applicability-of-prediction-markets-for-long-term-prediction/#comment-706 James, FX suffers from using play money, as well as from low resources (people, time, money, etc). The most relevant way to compare two institutions is on the same problem given the same resources. You could have the greatest institution there ever was, but if you applied it to twenty second graders for an hour, it just couldn't compete with a worse institution that had the resources of a hundred professionals for years. James, FX suffers from using play money, as well as from low resources (people, time, money, etc). The most relevant way to compare two institutions is on the same problem given the same resources. You could have the greatest institution there ever was, but if you applied it to twenty second graders for an hour, it just couldn’t compete with a worse institution that had the resources of a hundred professionals for years.

]]> By: Jason Ruspini http://www.midasoracle.org/2007/01/18/discussion-about-applicability-of-prediction-markets-for-long-term-prediction/#comment-705 Jason Ruspini Sun, 21 Jan 2007 01:06:25 +0000 http://www.midasoracle.org/2007/01/18/discussion-about-applicability-of-prediction-markets-for-long-term-prediction/#comment-705 The problem as discussed in the post is that there is no "pay off" incentive to predict an index value in 2020. Using shorter-term contracts as described provides that incentive. Tolerance to volatility is another issue. Discounting is something that can be relatively easily debiased, and I'm not sure in what sense the price of "true in 2015" would be correct or not. To the extent that the FX sea level rise market is wrong, I don't think it's a structural problem with long-term markets as such. Not having the incentive to find information today is another issue. The problem as discussed in the post is that there is no “pay off” incentive to predict an index value in 2020. Using shorter-term contracts as described provides that incentive. Tolerance to volatility is another issue.

Discounting is something that can be relatively easily debiased, and I’m not sure in what sense the price of “true in 2015″ would be correct or not. To the extent that the FX sea level rise market is wrong, I don’t think it’s a structural problem with long-term markets as such. Not having the incentive to find information today is another issue.

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